U.K. Ad Market Forecast to Shrink by £4.23 Billion


The latest Advertising Association/WARC Expenditure Report has a revised forecast for U.K. advertising spending in 2020 of £21.13 billion ($26.5 billion), down 16.7 percent from 2019.

U.K. adspend rose 6.9 percent year-on-year to reach £25.36 billion ($31.8 billion) in 2019, marking the tenth consecutive year of ad market growth. Despite 2020’s promising start in Q1, the downgrading of projections for the rest of 2020 and 2021 demonstrate the impact that COVID-19 has had on advertising since mid-March, as it has the U.K. economy as a whole. Projections prior to the COVID-19 outbreak forecast adspend growth in 2020 of 5.2 percent to a total of over £26 billion ($32.5 billion). Adspend is expected to return to growth in 2021 with a rise of 13.6 percent, but absolute levels of investment are not expected to surpass the 2019 total.

In the past year, VOD recorded growth of 15.5 percent but, overall, TV saw a decline of 3.5 percent. Both are expected to be affected by the downturn this year, with TV forecast to see a 19.8 percent drop in advertiser investment and VOD a 6.3 percent fall.

Stephen Woodford, chief executive of Advertising Association, commented: “Despite a good 2019 and promising start to 2020, COVID-19 has affected U.K. advertising as it has all parts of the economy and the falls we are seeing in adspend come as little surprise. The current quarter will be a tremendously tough time for many businesses across our industry. We are acutely conscious of their predicament and working fast with Government and officials, so that they get the best support possible.

“Instinct might tell businesses to be cautious in their advertising at this time and we all need to be mindful of the unusual times we’re living in. But at the same time, the importance of advertising during a downturn cannot be overstated. The vast majority of adspend, around 90 percent, will still be invested this year and businesses should ensure they are in the best possible place – and best possible shape – to take advantage of a return to growth when it comes. History shows the brands that emerge fastest and strongest are those that invest in advertising during a downturn.”

James McDonald, head of data content at WARC, commented: “This virus-induced recession is different to previous downturns in that the impact has been both swift and sharp across all media. The deterioration of advertising trade, we believe, will be focused primarily in the second and third quarters of this year, though the aftershocks are likely to last into the fourth quarter and early 2021. The small and medium-sized enterprises for whom digital advertising is a staple are particularly vulnerable during the lockdown period, and their recovery is expected to be protracted thereafter.

“Media costs have fallen as a direct result of lower demand for inventory and this, paradoxically, comes at a time when consumption and reach has grown markedly across TV, social media and online publications. Research on WARC from multiple sources shows that cutting advertising in a recession directly correlates with a slower recovery, but the practicalities of marketing in the current climate mean sustained investment is simply no longer feasible for a number of large product sectors.”